Private Sector

Investments in Land
for Food and Biofuels:
Investing
in Rural
Development
or Aggravating
Hunger and
Poverty?
Private Sector Investments
in Land for Food and Biofuels:
Investing in Rural Development
or Aggravating Hunger and Poverty?

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Oxfam is an international aid organization that works

with others to end poverty and human suffering. In
the Philippines, we work with poor people to sustain
their livelihoods, and reduce their risks to natural and
human-made disasters. We strive to enable poor
people to have a voice in economic issues affecting
them and we support poor women as they lead in
transforming unequal social and economic relations.
 I
Private Sector n 2007, local officials of the municipality

Investments in Land of Delfin Albano and nearby areas in

Isabela province were invited to China by
for Food and Biofuels: Philippine Fuhua Sterling Agricultural

Investing Technology Development Corporation for a

study tour. One year later, the local

in Rural
government of Delfin Albano facilitated the
signing of 25 lease agreements between the
corporation and the small farmer-landholders

Development of the municipality. These agreements cover

350 hectares of contiguous lands in Delfin

or Aggravating Albano, which have been earmarked for corn

production.

Hunger and Early this year, the local government of San

Poverty?
Mariano, also in Isabela, similarly identified
and facilitated the participation of 91 farmers,
including agrarian reform beneficiaries, in a
lease agreement with EcoFund Land
Development Inc.-Green Future Innovations
(ECOF), a private company interested in
producing bioethanol from sugarcane feedstock
and in building a bioethanol plant in San
Mariano. At present, ECOF already has 200
hectares for sugarcane nurseries and is
targeting to develop at least 1,000 hectares
more for the establishment of additional
nurseries.

The lease agreements in the aforementioned

two municipalities alone are already extensive
by themselves but they are just a small wave
in what’s increasingly becoming a deluge of
local and foreign private sector investments in
Philippine agricultural lands, one apparently
triggered by the increased global need for food
and energy security. For local and foreign

1
 investors, this situation presents a veritable
wellspring of business opportunities, one that
has prompted many to put money on deals
involving no less than three million of the
country’s agricultural lands.
The magnitude of ongoing and planned
agricultural investments, as well as the positive
and negative impacts that such investments
have brought about in the past, call attention
to the need to provide safeguards to local small
farmers and smallholders wanting to involve
themselves in such deals . In particular, the
current regulatory framework guiding
agricultural land investments in the country
should ensure that local producers — like the
men and women farmers of Delfin Albano and
San Mariano — will truly benefit from such
investments.
Also, for the sake of inclusive and sustainable
agricultural economic growth, there is a need
for government to strike a balance between the
use of agricultural lands to serve the country’s
food and development needs and the use of
such lands for private business, whether for
export or domestic food or biofuel feedstock
production.
All these point to the urgency of coming up
with a coherent and appropriate regulatory
framework that will govern investments in
Philippine agricultural lands so that these will
promote, rather than undermine, the country’s
agricultural and overall economic development
objectives. The sad reality is no such
framework exists at present, putting at risk not
only the interests and welfare of small farmers
and landholders but the sustainability no less
of agricultural industries in the country.
2
Enticing investments in
agricultural lands
Even prior to the surge of land investment
ventures in recent years, previous Philippine
governments had already been aggressively
pursuing programs and incentives to attract
the private sector to invest in the country’s
agricultural lands. Under Republic Act (R.A.)
7652 or the Foreign Investors Lease Act of
1993, foreign investors are allowed to lease
lands for 50 years, renewable for 25 years. The
Foreign Investments Act of 1991 (amended in
1996 as R.A. 8179) meanwhile, liberalized the
entry of foreign investments into the country
by relaxing restrictions on the participation of
foreigners as equity shareholders in local firms,
using the Foreign Investment Negative List as
a guide to levels of foreign equity allowed in
specific activity areas. This was followed by the
previous Arroyo administration’s Medium Term
Philippine Development Plan (MTPDP) 2004-
2010, which stipulated the development of “at
least two million hectares of idle lands for
agribusiness in order to create 10 million jobs”
in the agricultural sector by 2010.1 Pursuant to
this goal, the former president went on
numerous trips and missions abroad partly to
entice foreign investors to avail themselves of
this business opportunity. According to the
Philippine Agricultural Development and
Commercial Corporation (PADCC), the
government’s agribusiness marketing,
investment promotion, and project
development arm created during the Arroyo
administration, many of the agricultural land
investment deals (covering some 1.37 million
hectares) that it is now negotiating include
those that former president Arroyo had
brokered during her foreign trips and
forwarded to PADCC by the Board of
Investments (BOI).
Beyond PADCC’s initiatives, there are reports devoted to investments for such purposes as
that agricultural land deals are already being food and biofuels production.
forged under bilateral and regional trade talks
such as those for the RP-China Free Trade Global frenzy
Agreement. Some government agencies, in
fact, are said to have already signed several
The frenzy of investments in Philippine
memoranda of understanding (MOUs) with
agricultural lands, though, is hardly unique to
various Chinese investors for a host of
the country. All over the world, governments
agricultural investment projects, including the
and private corporations are going into
production of rice for possible re-export to
agricultural land investments, driven mainly by
China. These agencies include the Department
the need to secure longer-term food security in
of Agriculture (DA), the Department of
reaction to the food price spikes of 2008.
Agrarian Reform (DAR) and the Department of
Additionally, governments are looking at such
Environment and Natural Resources (DENR),
investments as vehicles for attaining energy
which have signed as Second Party to an MOU
security through biofuel feedstock production.
with Fu Hua Corporation to lease 1 million
Lately, such investments are also seen as a
hectares of land for agricultural production for
strategy for securing carbon credits, which can
25 years, with the option to renew for another
be used particularly by Annex 1 (developed)
25 years. The MOU is supposedly one of 31
countries to offset their commitments to
agreements forged under the RP-China talks.2
reduce greenhouse gas emissions (GHG) under
the United Nations Framework Convention on
Aside from China, the Gulf countries of
Climate Change (UNFCCC).
Bahrain, Kuwait, Oman, Qatar, Saudi Arabia,
and the United Arab Emirates have also
Yet another driver of the global frenzy of
reportedly expressed interest in investing in
investments in agricultural lands is the current
various agricultural ventures in the Philippines.
world view that investments in agricultural
These investments are intended to ensure the
production can be an effective hedge against
long-term supply of essential food commodities
inflation and a strategy for portfolio
such as cereals, meats, and vegetables for
diversification. This, in the wake particularly of
their populations. Bahrain has also reportedly
2009’s global economic crisis from which many
pursued plans to lease mariculture parks in the
major financial markets are yet to recover. The
country to produce seafood for export.
magnitude of global demand for land for
agricultural production investments is reflected
The Philippine government has also forged a
in the fact that negotiations for such land now
separate MOU with San Miguel Corporation
cover from 15 to 20 million hectares of
(SMC) and the Hong Kong-based Kuok Group
farmlands around the world, according to the
of Companies to develop up to one million
International Food Policy Research Institute
hectares of agricultural land through a US$1-
(IFPRI).3
billion food security project dubbed “Feeding
Our Future.”
At the receiving end of the frenzy of
investements in agricultural land are
In all, at least three million hectares of the
developing country governments such as the
country’s agricultural lands are estimated to be
Philippines, which, in a seeming race to the

3
 bottom, enthusiastically welcome such
investments as an opportunity to provide
resources for agricultural support services,
infrastructure development, or rural
employment that they are otherwise unable to
provide to their agriculture sector.
These investments are also welcomed by local
businesses and landowners looking for foreign
partners, and in many cases, even by farmer-
landowners who have very limited access to
production capital and markets for their
products.
On the other side of the fence are farmers’
organizations and civil society groups who
have been raising concern over the detrimental
impacts that such investments could have on
the country’s food security, poverty alleviation,
land rights, and rural livelihoods. These groups
are worried because of the generally weak
monitoring of the investors’ compliance with
their commitments, and their adherence to
local rules and regulations. The lack of
information on the nature and scope of, and
the entities behind, these investments are also
seen as a cause for concern. Oftentimes, there
is no transparency in how investments are
evaluated, fuelling speculations that many of
the transactions are fraught with irregularities
such as bribery of certain officials to facilitate
these transactions.
Supply and demand
drivers of agricultural
land investments
A. Demand drivers
1. Food
Two years ago, international food prices,
particularly for rice, rose to unprecedented
4
levels, triggering basically two kinds of reaction
from countries around the world. On one hand,
for countries such as the Philippines that do
not produce enough rice to feed its population,
the reaction was and still is to import rice from
countries that have a surplus of the cereal. On
the other hand, for countries such as China,
Bahrain and South Korea that do not produce
rice but have the money to spend for this and
other foodstuff, the tack has been to lease land
in other countries and use these to serve their
own populations’ food requirements.4
Whatever the reactions may have been or will
be, the situation was and continues to be one
favourable to investors looking to cash in on
the bottomline – the increasing global demand
and competition for food. Such a situation is
reflected in the following facts and figures:
• According to the World Rice Production
and Consumption Index of the United
States Department of Agriculture, two
years after the 2008 food crisis, a
sizeable gap remains between the
Philippines’ rice consumption and rice
production levels. For the last two
years, the country has been producing
only an average of 10.7 million metric
tons of rice per year while rice
consumption has increased from 13.6
million metric tons in 2008 to 14 million
in 2009.5
• According to an OECD-FAO study, world
food production needs to increase by
40 percent by 2030, and by 70 percent
by 2050 (based on the average 2005-
2007 levels) in order to cope with the
increased demand resulting from
higher incomes and bigger
populations.6 And while food prices
have gone down since 2008, current
 food prices are still higher by 10-30
percent than the previous decade. This
still provides an incentive for investors
to pursue agricultural land investments
for food crops cultivation.
2. Agrofuels
Most of the 1.37 million hectares of Philippine
lands currently under negotiation for private
sector agricultural land investments through
the PADCC7 are for the production of agrofuel
feedstock, i.e., coconut, jatropha and oil palm
for biodiesel, and sugar, sweet sorghum,
cassava, and molasses for bioethanol.
Leading in the development and use of land for
biofuel production purposes is the Philippine
National Oil Company-Alternative Fuels
Corporation (PNOC-AFC), which has an overall
land requirement of 192,500 hectares for the
cultivation of jatropha for biodiesel production.
The company has already entered into venture
arrangements with several local government
units (LGUs) in Zambales, Quezon, Palawan,
Cebu, Bohol, Bukidnon, and General Santos,
and even with tribal groups in Lanao del Norte.
Meanwhile, Eastern Renewables Fuels
Corporation (ERFC), a subsidiary of Eastern
Petroleum that is engaged in the production of
cassava for agrofuel feedstock, is targeting to
expand its cassava production area to 4,500
hectares to supply its bioethanol plant. The
8
company has already announced its plan to
establish a plant in Central Mindanao as part of
a joint venture agreement with Junaxi State
Farm in Mainland China. ERFC also reports that
while the establishment of the bio-ethanol
plant is still underway, it will be shipping its
cassava production to China for processing into
bio-ethanol. This, in turn, could later be
exported back to the Philippines, the company
says.
ERFC has targeted the province of Isabela as
one of its production areas. It has a standing
agreement with farmers in the municipality of
Quezon covering 1,000 hectares of lands for
cassava production. It has also conducted a
seminar in B.K. Martinez for farmers who are
interested to produce cassava. Initially, some
33 hectares of lands in B.K. Martinez are
already being planted to cassava for ERFC, and
the company is targeting to increase this to at
least 200 hectares.
Similar to the lands in Delfin Albano and San
Mariano, most of the lands in Quezon and B.K.
Martinez that were tapped for said agricultural
land investment deals are idle. While this had
been attributed to the character of the soil in
the area, this is also largely because the
farmers lack basic support services, such as
irrigation, to make the same lands productive.
For farmer-smallholders, leasing their idle
lands is an attractive option given the potential
additional income that such deals are expected
to generate.
Meanwhile, the passage of the Philippine
Biofuels Act of 2006, which established very
clear targets for agrofuel use, has created a
domestic demand for bioethanol and biodiesel
products that is hard to resist for most
investors. High demand for agrofuels is not
only guaranteed by law at present but is also
programmed to grow in the future.
Concern, however, has been expressed over
the effect that the high and sure demand for
biofuels would have on food production, what
with demand for land for biofuels competing
with demand for land for food production.
3. Climate change action
Climate change mitigation activities are also
expected to impact on land use allocation in a
5
 big way, given the existence of various
incentives for utilizing land for this purpose.
Foreign private companies are already making
a beeline for the Philippines to try to cash in on
such incentives.
One such company, the Australian carbon
trader Shift2Neutral Pty Limited has reportedly
already entered into an agreement with the
Tribal Coalition of Mindanao Inc. (TRICOM)
based in Butuan City for a carbon credit
arrangement involving 340,000 hectares of
their ancestral land in the CARAGA Region. 9 Limited public spending on agriculture is one of
This same company has also been reported to
have signed an agreement with the local
government of Samar to certify 400,000
hectares of first growth forest for carbon
credit.
However, according to the National
Commission on Indigenous Peoples (NCIP) and
the Climate Change Commission, protocol
guidelines and rules must first be set before
carbon trading projects can be implemented. 10
This, in light particularly of the concern that
the presence of a carbon market, which
provides developed countries with flexibility in
meeting their greenhouse gas (GHG) emission
reduction targets, creates and exacerbates
competing demands for agricultural lands. For
instance, allowing countries to reduce emission
from deforestation and denudation (REDD) can
be expected to increase the demand for land
for purposes of reforestation, as this will
enable them to earn and trade carbon credits.
Similarly, the growing emphasis on the use of
renewable energy, as an alternative to fossil
fuels, has been one of the main drivers of
overseas agricultural land investments. In the
Philippines, many of the inquiries on land
investments relate to the production of
feedstock for agrofuels.
6
B. Supply drivers
In the Philippines, several factors and
conditions contribute to making private sector
agricultural land investments enticing to the
government, local businesses and landowners,
and even small farmers. These, in turn,
contribute to a slew of farmlands available for
private sector investment arrangements and
agreements.
1) Limited public investment in agriculture
the most important supply drivers of private
sector agricultural land investments in the
country. For instance, the potential of irrigation
to increase agricultural output by at least 20
percent remains largely untapped because
irrigation is still highly inaccessible to many
small men and women farmers. In 2006, only
1.4 million hectares of the country’s 3.1 million
hectares of agricultural lands had irrigation
facilities. This means that only 45 percent — or
less than half of the country’s agricultural land
resources – are able to maximize their full
production potential.
Government intervention in credit delivery for
small farmers is also practically non-existent.
The accessibility of credit for agricultural
production capital has even worsened in the
past decade. Although the absolute value of
credit extended to agriculture has increased
over the years, the ratio of agricultural
production loans to total loans has declined
from 6.99 percent in the 1990s to only 0.94
percent in 2006.
2) Idle lands and low incomes
from agriculture
The previous government had justified the
drive to generate private sector agricultural
land investments by citing the transformation
of idle and marginal lands into productive
farms and the generation of income for rural
communities among its benefits.
The municipalities of Delfin Albano, San
Mariano, and Quezon in Isabela province are
cases in point that illustrate the lack of
irrigation facilities and other resources needed
to make idle lands productive as a factor that
prompts the owners of such lands to enter into
land deals with private companies.
Farmer-landholders are also attracted to such
deals because these bring with them the
promise of higher incomes. Many small
landholders are into rice and corn farmers. Per
data from the Bureau of Agricultural Statistics,
rice production nets an income of only
PhP8,447 per hectare for non-irrigated lands,
and PhP14,063 per hectare for irrigated lands.
For yellow corn, the average net return per
season is PhP14,050 per hectare while white
corn nets even lower, at only PhP 2,434 per
season per hectare. On the other hand, high-
value food crops such as mango and pineapple
are able to generate net returns of PhP70,062
and PhP121,006, respectively.11
3) Government policy
At the national level, the Philippine
government has endeavoured to create a
policy environment that is friendly to private
sector investments. As earlier mentioned, such
policy environment is reflected in the previous
administration’s MTPDP, which called for the
development of two million hectares of idle
lands for agribusiness as a way of increasing
rural employment and incomes. The previous
administration also created the PADCC to aid in
the implementation of such a policy mandate.
At the local level, the passage of the Local
Government Code of the Philippines has made
it easier for private investors to directly
approach and enter into land deals with local
government units (LGUs). At the moment,
however, there is no comprehensive inventory
that has been done of all private sector land
deals with LGUs. One reason for the absence of
such an inventory is the fact that many such
deals are virtually invisible, having been
undertaken with the support of local partners
acting as frontmen.
Some other deals, though, are visible, with
local governments actively and openly
assisting the entry of foreign investors into
their jurisdictions as in the cases of Delfin
Albano and San Mariano municipalities in
Isabela. Or the case of the Pinamalayan,
Oriental Mindoro LGU, which facilitated a 15-
year lease agreement between local farmers
and the South Korean company K-Bio. The
local government also helped identify 2,000 to
3,000 hectares of land for the company’s bio-
diesel project.
At the regional level, the Philippines has
committed itself to various bilateral and
regional free trade and investment agreements
with provisions that aim to facilitate the influx
of foreign investments into the country.
Negotiations on these agreements also serve
as venues to discuss investment arrangement
opportunities. For instance, the RP-China Free
Trade Agreement was reported to have paved
the way for the signing of MOUs between
Chinese companies and local government
agencies.
Impacts of agricultural
land investments
Previous studies have already noted both the
positive and negative impacts of agricultural
7
 land investments on the rural sector and the
Philippine economy in general. It is important,
however, to distinguish between the short-term
impact of agricultural land investments and
their long-term implications on rural
livelihoods, food security, and environmental
sustainability. Only by weighing both short and
long term impacts can one have a more
strategic perspective of agricultural land
investment and manage it in a way that
supports, rather than undermines, sustainable
agricultural development.
A. Short-term impacts
1. Additional income and influx of
production capital and resources
The most apparent and immediate impact of
agricultural land investments is the creation of
opportunities for additional income for small
men and women farmers, either from lease
rentals or from jobs generated through the
investment arrangement. The absence of other
income opportunities and the fact that rural
incomes are so low both serve as powerful
incentives for farmers to enter into land
investment arrangements, no matter how
inequitable the terms of some agreements may
be.
For the farmers of Delfin Albano and San
Mariano who have entered into lease
arrangements with private investors, the
immediate and more important concern is the
additional income that the previously idle lands
will now provide, rather than the provisions of
the agreement. In a situation where there is
little public investment for basic agricultural
support services, private investments create
opportunities for production capital to flow into
communities and stimulate agricultural
production.
8
On the other hand, for the members of the
First Agrarian Reform Multi-Purpose
Cooperative (FARM Coop) in Bukidnon, the
biggest advantage of having a partnership
agreement with Dole Philippines is getting a
guaranteed income of PhP 15,870 per hectare
per year. Coop members receive this income
regardless of the plantation’s level of banana
production and regardless of the global market
situation for bananas.
Additionally, coop members welcome the fact
that Dole provides incentives for increased
production. Last year, farm workers were able
to take home PhP2,500 as production incentive
on top of their regular wages. They also earn
additional income by renting out to Dole an Elf
truck to haul and transport bananas. The
cooperative also operates a credit program for
its members and undertakes various livelihood
projects.
The agreement between Dole and FARM Coop
is set to expire in 2013. The members of the
cooperative board recognize that the
cooperative has become highly dependent on
contracts with multinational companies (the
cooperative also had a contract with Del
Monte) for its survival and has yet to develop
an independent long-term development
strategy for itself.
To date, Dole Philippines has already invested
in at least 800 hectares of banana plantations
in Bukidnon through different investment
arrangements. The output of the plantation
farms in Bukidnon is exported to Japan, South
Korea, and Saudi Arabia, among other
countries
2. Use of idle lands
To dismiss negative claims of agricultural
investments on food security, the government
has taken to citing that many of these
investments involve idle lands.
Even farmers of Delfin Albano and San Mariano
are defending the lease agreements on the
ground that these are situated on idle lands. In
truth, these private companies – with sufficient
investments — are able to make these lands
productive. This underscores government’s
lack of basic support services as the real
reason behind the failure of farmers to benefit
from, and maximize the use of their lands.
Furthermore, using these idle lands for
agrofuel feedstock production effectively limits
the possible expansion areas for food
cultivation, which is critical to the present
situation where rice consumption, for example,
is far greater than domestic rice production.
There is also no guarantee that these
corporations will not encroach on lands
devoted to food production and domestic
consumption if production on these idle lands
proved satisfying.
3. Land reconsolidation and displacement
Agricultural land investments can lead to land
reconsolidation and undermine the ideals,
principles, and objectives of agrarian reform.
Ironically, it is the government, through
PADCC, that facilitates reconsolidation of
farmlands in order to produce for investors the
volume requirement for particular crops. In the
process of land reconsolidation, however,
farmers actually give up control over their
lands to investors and corporations.
In many instances, the lands that these
investors would consider ideal for their projects
are those that are already being cultivated and
occu-pied, since such are already developed
and ready for production, arable and fertile,
near water sources and other natural resources
necessary for agricultural production, and are
generally accessible to public transport.
4. Land lock-up and one-sided contracts
All agricultural investment arrangements entail
locking up land for specific uses. Many
contracts are also structured in such a way
that would make it difficult for farmers to
terminate the terms of the agreement, while
giving investors the option to back out of the
investment arrangement anytime without any
safeguards for farmers/landowners. Small
farmers are often not in a position to
intelligently negotiate the terms of any legal
contract with large agribusiness firms. As a
result, many of the contracts are patently one-
sided and biased in favour of the firm.
In most cases, the lease agreements
effectively cede full control over the land over
very long periods and make the agribusiness
firms the veritable owners of the land, similar
to the case of the farmers in Delfin Albano
when they signed the 25-year lease agreement
with Philippine Fuhua. The agreement also has
provisions giving the investors the flexibility to
terminate the contract practically anytime.
For FARM Coop members, one of the
disadvantages with having a long-term
contract with Dole is that it is difficult to
change the terms of the contract agreement to
respond to changes in situations or conditions.
They usually have to go through a long and
tedious process of negotiation in order to
amend or change the terms of their contract.
The fact that the agreement is long term in
nature almost always gives rise to a need to
change some provisions to keep the contract
updated and current, particularly in terms of
prices, terms of production incentives, farm
operations requirements, etc. Undertaking a
long term contract with Dole or with any other
9
 company limits their flexibility to take
advantage of new investment opportunities as
they are bound by the terms of the agreement.
In the case of the farmers in Quezon, Isabela,
the risks are largely shouldered by the farmers
themselves, as they are producing cassava for
ERFC using loans that they themselves
accessed from the Land Bank of the
Philippines. ERFC only guarantees 10 percent
of the production loan from Land Bank. Hence,
the potential for indebtedness in cases of crop
failures or even as a result of a sudden
decision by ERFC to close down or transfer
operations, is borne almost entirely by the
farmers.
B. Long-term implications
1. Impact on food security
Agricultural land investments that are mostly
for agrofuel feedstock divert agricultural lands
from actual and potential food production.
Given the gap in rice/food consumption and
production, the 1.37 million hectares identified
by PADCC for agricultural land investments, if
tapped to produce rice, could yield 2.4 million
metric tons of rice at the very minimum. This
is enough to make the Philippines self-
sufficient in rice production and insulate it from
volatilities in the world food market.12
Interestingly, even Vietnamese authorities
have apparently begun to worry about the
rapid conversion of their own rice lands for
other crops and uses, including non-food
production by domestic and foreign investors.
Many countries have also started to re-
evaluate their agrofuel initiatives, due to fears
that such ventures directly compete for land
that should be prioritized for food production.
In many cases, the crops that foreign investors
want to grow may not be essential for the host
10
country’s food security. The region’s rice self-
sufficiency is also threatened by projections
that climate change will significantly reduce
water availability and rice output in major rice
production areas along the Mekong River,
particularly in Vietnam.
In June this year, the new government of
Madagascar rescinded the agreement forged
by its predecessor and South Korean
conglomerate Daewoo Logistics in November
2008. The agreement would have granted
Daewoo a 99-year lease of 1.3 million hectares
of Madagascar’s farmland (approximately 40
percent of the nation’s total landmass) for corn
and palm oil cultivation for exports.13
2) Impact on ecological sustainability
of agricultural production
Companies engaged in large-scale agricultural
production, whether for export or for the
cultivation of agrofuel feedstock, always bring
in their own technology package that invariably
involves extensive and intensive use of
chemical inputs such as fertilizers, pesticides,
and herbicides. One government official from
Bukidnon14 noted that many foreign
corporations are now moving to Bukidnon from
Davao precisely because the lands in Davao
are no longer productive, having been
subjected to decades of intensive and
plantation-type chemical farming.
Beyond the steady income, there are also
important concerns by members of the FARM
Coop regarding the possible effect of intensive
banana production on the long-term
sustainability of their soil and agricultural
production. There is great pressure even from
members and workers to intensify chemical
use in order to increase output because of the
production incentives. Unfortunately, the
extensive and intensive use of chemicals to
boost production will eventually damage the
nutrients and long-term productivity of the
soil.
In other Asian countries, too, there are reports
about the detrimental impacts of large-scale
agricultural activities on the local ecology. For
instance, there have been reports that the
large-scale planting of non-indigenous wood
species have started to affect the bio-diversity
and ecological balance in forest areas of Lao
PDR and Cambodia. Additionally, some of the
timber species like eucalyptus have allegedly
strained local aquifers because of their
relatively massive absorption of underground
water and nutrients.
Conclusion and
recommendations
There is no doubt that private agricultural land
investments have generated significant
economic and other benefits to farmers, small-
scale entrepreneurs, and entire local
communities in the host countries. However,
experience has failed to show any guarantee of
lasting improvement in the situation of small
farmers, small landowners, and contract
growers. Also, the interests of host countries —
especially food security, environmental
sustainability, socio-economic development,
and poverty alleviation – are in danger of
being compromised if the investments were
allowed to be purely exploitative and extractive
in nature.
This underscores the imperative for an
approach that would allow investors to
reasonably profit from such investments and at
the same time, provide concrete and lasting
benefits to small farmers, contract growers,
local landowners, rural communities, and the
recipient country as a whole.
For this to happen, the following actions are
recommended:
1) Develop and implement a
Comprehensive Agricultural Development
Framework and Plan, which will articulate,
among other things, government’s policy on
food security, food self-sufficiency, agricultural
land use and investments, rural development,
environmental protection, farming
technologies, and trade. This will be the
overarching development objective and policy
declaration of the government that will guide
all ongoing and future private sector
agricultural land investment deals in the
country. Among the priority legislation under
this development framework is the enactment
of a National Land Use Code that will prioritize
and set aside lands for food production, and
protect it from land and crop use conversion.
2) Develop, in consultation with
stakeholders, a binding code of conduct
for investors. At present, there is no code of
conduct for agricultural investors to ensure
that their goal of maximizing profit and
economic opportunities are not being pursued
at the expense of the welfare of smallholders
and the country’s development objectives such
as food security, rural livelihoods, and
environmental sustainability. The obligations
and commitments of foreign investors should
be clearly laid out before the corresponding
permits to operate are issued. Through
appropriate government agencies, the
adherence by investors to the country’s labour,
environmental, and land use rules and similar
regulations will be regularly monitored.
11
 3) Plug loopholes to improve the existing
investment regulatory and monitoring
framework for land investments,
including those facilitated directly on the
ground with local government units or
with private consolidators. Current national
laws and regulations are not sufficient to
safeguard food security and protect the welfare
of small farmers vis-à-vis the interest of
investors because of certain loopholes in the
way these rules are structured.
4) Provide legal, negotiating, and
capability-building support to farmers
entering into agricultural land
investments. Legal and other forms of
assistance will be needed by the poor, mostly
uneducated and unorganized farmers and
landowners who are particularly vulnerable to
manipulations by speculators and unscrupulous
investors. Such investment arrangements
should contain provisions that allocate risks to
all parties in a fair manner. As a basic tenet,
there should be free, prior, and informed
consent on the part of farmers on whether
they would prefer to lease their lands to
investors, engage in contract growing
arrangements, or sign any agreement involving
their lands and rights.
5) Increase public investment as a
strategy to empower farmers and
promote food security. Private farmland
investments are not the fundamental solution
to the problems that continue to confront small
farmers and landless rural workers in the
country. Governments cannot forfeit their
responsibility and pass on the obligation to
build roads, and irrigation and post-harvest
facilities to private investors. The government
needs to provide sufficient public investment in
agriculture as a way of providing small farmers
and other rural producers the option to develop
12
and optimize the production potential of all
their lands and give them the capacity or
necessary leverage to demand for better
investment arrangements with potential
investors.
There is no doubt that private agricultural land
investments have generated significant
economic and other benefits to farmers, small-
scale entrepreneurs, and entire local
communities in the host countries. However,
experience has failed to show any guarantee of
lasting improvement in the situation of small
farmers, small landowners, and contract
growers. Also, the interests of host countries —
especially food security, environmental
sustainability, socio-economic development,
and poverty alleviation – are in danger of
being compromised if the investments were
allowed to be purely exploitative and extractive
in nature.
This underscores the imperative for an
approach that would allow investors to
reasonably profit from such investments and at
the same time, provide concrete and lasting
benefits to small farmers, contract growers,
local landowners, rural communities, and the
recipient country as a whole.
Notes
1
See Chapter 2:Agribusiness of the Medium
Term Development Plan
2
IDEALS, (2007).
An analysis of the RP-China Memorandum of
Understanding on the development of 1 million
hectares of land for hybrid corn, hybrid rice
and hybrid sorghum farming, AR Dialogues-
No. 3-07
3
Kugelman, M. (2009). Introduction, Land
Grab? The Race for the World’s Farmland
[Electronic version] Woodrow Wilson
International Center for Scholars.
4
Mann, Howard. Foreign land purchases for
agriculture: what impact on sustainable
development, United National Department of
Economic and Social Affairs, from website
http://157.150.195.10/esa/dsd/resources/
res_pdfs/publications/ib/no8.pdf
5
http://www.fas.usda.gov/grain/circular/2009/
10-09/grainfull10-09.pdf
ID=681&hidReportRetrievalTemplateID=7
6
From OECD-FAO Agricultural Outlook 2009-
2018 http://www.fao.org/es/esc/common/ecg/
599/en/OECD_Highlights.pdf
7
Based on the report “Agribusiness Account
per Region,” PADCC, http://
www.philagribiz.com/
8
See “Eastern unit to expand cassava
plantation” by Abigail Ho for the Philippine
Daily Inquirer, available at http://
business.inquirer.net/money/breakingnews/
view/20080514-136422/Eastern-unit-to-
expand-cassava-plantations, May 14, 2008
9
http://balita.ph/2010/07/21/ccc-seeks-
establishment-of-governing-rules-on-carbon-
credit-scheme-alvarez/
10
http://www.redd-monitor.org/2010/08/19/
shift2neutral-in-the-philippines-or-how-to-
make-a-porsche-carbon-neutral/#more-5417
11
Bernabe, R. (2010). Private Sector
Agricultural Land Investments: Impacts on
Small Men and Women Farmers and on Food
Security. Unpublished Paper commissioned by
Oxfam-GB Philippines
Bernabe, R. (2010). Private Sector
12
Agricultural Land Investments: Impacts on
Small Men and Women Farmers and on Food
Security. Unpublished Paper commissioned by
Oxfam-GB Philippines
13
http://craccum.co.nz/?p=3631
14
Bernabe, R. (2010). Private Sector
Agricultural Land Investments: Impacts on
Small Men and Women Farmers and on Food
Security. Unpublished Paper commissioned by
Oxfam-GB Philippines
13
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